My option trades

Interesting on the volatility stuff.
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Saturday morning and I watched the sun come up, had a cup of tea and some breakfast and been scrolling around looking for a PUT Debit Calculator.

The only one I found, wouldn´t let me alter the prices, by shifting the index, like I do with straight calls and puts.

I did run across an article on this PUT debit spread that said the profits were greater if you went OTM, but you had to go a greater distance or something.

Anyway, I got the point that you want the index to move in the direction of the falling index, in this case QQQ. If you reach the sold side, you have maximum profit.

I can certainly see a trade time and place, where this PUT debit spread would work. Maybe once a week? Might give it a try, but on paper one time and see what happens in the weeklies. As I think that is what Forex Forex is doing.

Ongoing education here for a 75 year old.
 
I´ve been watching in BIG CHARTS that shows when the MM run the stops. You get this quick knee jerk, long bar, out of proportion to the ATR. ( Geez I´m getting as bad as ATTICUS for acronyms :D )
To make a long story short I had thought there might be a way of foretelling market direction by the direction they clean out the shorts each week, when volume falls low. Been watching it for some months, but there doesn´t seem to be any forecasting ability, or consistant correlation, to which way they clean out the stops.
SCRATCH that idea!
 
Just ran that idea of the 38 number for volatility somebody was quoting the other day.

There is an IV number on TOS option chain. But that wasn´t it. More like VIX that one. About 17.5 for IV in QQQ.

I have another source and the CLOSE on Friday was 39.22 for volatility. Which seems more or less in the ball park with whoever gave that quote. I never knew what those numbers meant on the side of the screen, but that just might be it. I´m thinking?

Interesting bit of trivia to pick up. Useful no doubt.
 
Quote from falconview:

Just ran that idea of the 38 number for volatility somebody was quoting the other day.

There is an IV number on TOS option chain. But that wasn´t it. More like VIX that one. About 17.5 for IV in QQQ.

I have another source and the CLOSE on Friday was 39.22 for volatility. Which seems more or less in the ball park with whoever gave that quote. I never knew what those numbers meant on the side of the screen, but that just might be it. I´m thinking?

Interesting bit of trivia to pick up. Useful no doubt.
More...

Dude! NWM was referring to AAPL IV.
 
38 was AAPL 5 day realized according to Bloomberg. My models which are pretty crude said march was 34. The 38 for AAPL understated the "true vol" because all 38 points were in one direction. Just saying that AAPL options were trading cheap to very recent historical realized and given other factors - the trendiness of the stock and that it was at all time highs, made buying gamma a good idea. Since then it hasn't paid off, but it's been 2 days. Let's see how it goes next week.
 
Quote from newwurldmn:

38 was AAPL 5 day realized according to Bloomberg. The 38 for AAPL understated the "true vol" because all 38 points were in one direction.
More...
Short-term RV is usually calculated assuming zero mean. Are you sure BBG does differently?
 
Market makers running the stops.

Took a quick look at BIG CHARts for QQQ.

A week ago Friday, the market makers ran the stops at the close of day, and they ran the stops in the UP direction. Subsequently, over the next two days the following week, the market went UP.

Last Tuesday of last week, the market makers run the stops on the close on Tuesday in a DOWN direction. The market had been climbing Monday and Tuesday. Wednesday Thursday, this resulted in the QQQ stopping the ascent and turning sideways. Leveling off horizontal.

On Friday, at the close, the market makers ran the stops in the Down direction. Rule of thumb maybe, the market will go down on Monday??? Since it has been going horizontal.

Just something to think about.

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I have a plan to try the DEBIT SPREAD, this week. The FOREX FOREX way. Not ever having done this before, there is some kind of lingering question in my mind about something I read sometime, that if you have the market go through the DEBIT SPREAD to the SOLD side, you make a profit, but if it passes the SOLD strike, then you get assigned the stock, or the cash, if you jump over a cent or so? It was many years ago, decades I remember that happening to me, in the 1980´s when trading stock and trying options. ( I went broke ), or something like that. In the days when you paid $300 commissions to a broker for an option trade and there were no resources to learn this stuff.

Would somebody clear up this lingering question and doubt in my mind please?
 
The long side of the spread is automatically exercised at expiration. It nets to zero position (exercised at x, assigned at y). There is no practical assignment risk as you always have the (deeper) ITM long option. You would have a ~100D long call covering an assigned short stock position. You would time to exercise at no additional risk.
 
How do you know the market makers are 'running the stops' ?

What kind of debit spread are you talking about?

A bull call spread?

A bear put spread?

ITM?
ATM?
OTM?

On the Q's or something else?
 
Dan Shirly

If you go to Big Charts on the hourly chart. You will see the index in QQQ or other indexes, in a bar chart, with a long bar down, that is out of proportion to the movement on a daily basis. The close is always back in rythm for that day. Near the open of the day, or regular daily ATR.

That long bar is when volume is low and and at the close of the day. Normally it does not show, as Big Charts is 15 min. delay, but after the market is closed it will show.

It´s something I picked up decades ago, when I used to trade stocks.
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As to the query on the debit spreads, something I am trying to learn and find a way of using. I´m thinking of OTM debit spreads, perhaps one or two strikes. Forex forex on here is into this stuff. This pre-supposes, I can find a way to forecast a 2% or greater move the following day. Actually I´m just going to the debit spread calculator and see if I can figure something out. This being Sunday and all. Wish I could find a better debit spread calculator. It would not work ordinarily. But might work if I could predict a good move.

What got me interested was Forex Forex with his flawed data on the Risk Reward ratio. Something else I´m not familiar with yet.

Generally speaking I have learned not to waste my time on complicated strategies, because each time you try to reduce risk, like ATTICUS with the butterly, with wings and other stuff hedging. The costs of the commissions and including the bid ask spread. Seems to this amateur, to be a waste of time. There is no meat in the bun left after all that, for a small account holder. Better off to master directional trading and cut your losses short. ( quickly ) I lean toward Ryan´s straight gambling technique. You either win, or if you can, get out quick. I´m an amateur so take my opinion for what it is worth. ( NOTHING )

You have to compare as a small retail trader amateur, with somebody trading millions of dollars and would be happy at the end of the year, with matching the return of the S& P 500 index, someplace around 10% or so.

I´m a small guy, I need to make more money and so take more risk. Linda Raske is famous for earning 40% a year and is in the book MARKET WIZARDS. Where does that put somebody like Ryan running this forum, who is up over 555% in 3.5 months? He is making Linda look very poor. Mind you there are limitations of size to consider here as well, when it comes to accounts.

Taking 2% of your account bets as a small retail trader is not going to cut it.
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